2017 (9) TMI 1070 - AT - Service Tax

Commercial Training or Coaching Service - claim of the appellants is that they will not be covered by the above definition since IIMT is owned and run by different entities during the period under consideration, however these entities were being run with no profit motive - whether the activities carried out by IIMT will be covered within the definition of Commercial Training or Coaching Centre as above? - Held that - from the very fact that the explanation was inserted retrospectively, and is qualified by the words for removal of doubts it is evident that there were doubts regarding applicability of the definition as it stood before the insertion of the explanation. It is also a settled position of law that there can be no allegation of evasion when such doubt existed in the interpretation of the definition. It is also well settled that demand for service tax cannot be created with retrospective effect by insertion of explanation - the demand for service tax has to be restricted to that falling within the normal time limit. Whether they will be entitled to benefit of exemption notification issued for vocational training? - N/N. 9/2003 as well as N/N. 24/2004 - Held that - The appellant will be entitled to benefit of N/N. 9/2003 as well as N/N. 24/2004 only in respect of the courses such as VLSI design as well as Food & Beverage service and nor to other courses leading to award of degree by U. K. University. Demand upheld only for normal period - Matter is remanded to the adjudicating authority only for re-quantification of the service tax demand within the normal time limit - appeal allowed in part.

Summary

Issues:
- Whether the activities of the institute fall under the definition of "Commercial Training or Coaching Centre" for service tax liability.
- Whether the institute is eligible for exemption under Notification No. 9/2003 and Notification No. 24/2004 for vocational training courses.

Analysis:

Issue 1: Activities falling under "Commercial Training or Coaching Centre"
The appeals were filed against the order confirming service tax demand for the period 01.07.2003 to 30.09.2008 for alleged "Commercial Coaching and Training Services." The Institute for International Management and Technology (IIMT) conducted courses in Hotel Management, Business Administration, and Software Engineering. The definition of "Commercial Training or Coaching Centre" includes any institute providing such services. The Finance Act, 2010 inserted an explanation clarifying the inclusion of institutes imparting training for consideration, even without profit motive. The tribunal held that IIMT's activities fell within the definition, but the demand was restricted to the normal time limit due to doubts existing before the explanation's retrospective insertion.

Issue 2: Eligibility for Exemption under Notification No. 9/2003 and No. 24/2004
The institute claimed exemption under these notifications for vocational training courses. The notifications define a "vocational training institute" as one providing coaching or training enabling trainees to seek employment or self-employment directly after completion. The tribunal differentiated between courses awarding U.K. University degrees and those for VLSI design and Food & Beverage service. While the former did not qualify as vocational courses, the latter were considered eligible for exemption. Therefore, the institute was entitled to exemption only for specific vocational courses, not for degree courses.

In conclusion, the tribunal modified the impugned order, upholding the service tax demand within the normal time limit. The matter was remanded for re-quantification of the demand within the specified period, with no penalties imposed but interest payable on the confirmed demand.